AMC Stock’s Fails to Deliver numbers have once again skyrocketed. Failure to deliver as explained on Wikipedia: In finance, a failure to deliver is the inability of a party to deliver a tradable asset, or meet a contractual obligation. A typical example is the failure to deliver shares as part of a short transaction.
Things to note with failure to delivers (FTD) *Source Investopedia*
- Failure to deliver (FTD) refers to not being able to meet one’s trading obligations.
- In the case of buyers, it means not having the cash; in the case of sellers, it means not having the goods.
- The reckoning of these obligations occurs at trade settlement.
- Failure to deliver can occur in derivatives contracts or when selling short naked.
In the chart above you can see the failure to deliver report has been trending up as of the last several days inside the report. With August 12th even reaching over 300,000 FTDs for AMC Stock. The retail investors that hold AMC Stock are very concerned about the higher-than-normal fail to deliver numbers when it comes to AMC Stock and thing that there could even possibly be naked short selling going on here.
WHAT IS NAKED SHORT SELLING?
A regular short sale is when an investor sells borrowed shares and has agreed to buy the share back later (hopefully at a lower price) which ultimately would net the investor a profit. A naked short sale on the other hand is when an investor bets against a stock without actually borrowing the existing shares first.
Naked short selling is illegal because of its ability to artificially push down a stock’s price. Essentially short selling creates an environment where investors are not actually borrowing existing shares, but they’re still selling shorts — and as many as they want.
Above are more dates with corresponding fails to deliver for AMC Stock. Some of the numbers are even much higher than the numbers we see in the more recent reporting.
What does this chart clearly show? It clearly shows that since the start of the “meme stock” era, fails to deliver have been on the rise like crazy. What is even crazier is that year to date fails to deliver for AMC Stock have reached over 51 million!
In closing we might ask… What can be done about this? Why are the failure to deliver numbers so high? The answer needs to come from those in power like the SEC and other regulatory departments that oversee the markets ect.